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1. Market Anxiety Peaks Two Months Before the Election
As the election nears, investors will become more anxious about how the market may react to each candidate and their campaign promises. Accordingly, we suspect that shifting polls will breed volatility. Moreover, with President Biden dropping out of the race, this presidential election is unique. Below, we share and discuss two charts to help guide our expectations. — Michael Lebowitz
2. Fed Watch: This May Be the Last Time
Once again, the Fed kept rates unchanged at the July FOMC meeting. As a result, the Fed Funds trading range remains in the 5.25%–5.50% band that was introduced exactly a year ago and still resides at a more than 20-year high watermark. For those keeping track, this represents the eighth consecutive FOMC meeting where the policy maker decided to take no action on the rate front. However, if the inflation and labor market data continue to “cooperate,” this may be the last meeting where rates are left unchanged, with expectations for the first rate cut building for the next FOMC gathering in September. — Kevin Flanagan
3. The Storm Before the Calm
The weakness in labor markets fully revealed on Friday drove the 10-year Treasury yield down to a 14-month low of 3.79%. Unfortunately, this benchmark rate decline signals rising recession risks. Fortunately, lower interest rates decrease recession risks. Clearly, the Fed has fallen behind, but they can quickly catch back up with the next FOMC meeting only six weeks away. — David Waddell
4. Are the Credit Markets Cracking?
This past weekend’s Newsletter discussed how yield curve un-inversions have an excellent track record of predicting recessions. Another historically reliable indicator of recessions is weakness in the corporate credit markets. In mid-July, we highlighted a troubling divergence between the best and worst-rated junk bonds in our Daily Commentary, The Credit Widening In The Coal Mine. — Lance Roberts
5. Finding the Market Bottom
The What Does It Mean? podcast sifts through the noise to break down only the most important stuff impacting the stock market, the economy and your money this week. Chris, Bob, Lindsey and their guests give their (often) varying perspectives. Every episode ends with a lesson learned and how it applies to your money. In this episode, our hosts discuss market volatility following the Fed's policy meeting, examining factors like the carry trade, Fed credibility, employment data, and monetary policies in the US and Japan. — What Does It Mean?
6. Top Reasons for Offering Alternative Investments
From my discussions with independent advisors, alternatives are being considered more and more. What was once nice to have given the historical context that private markets were usually only accessed by institutions and the most sophisticated clients, advisors didn’t have a need nor demand to implement these solutions. Within recent cycles, this is no longer the case. With a client having more access to information if not the same amount as their advisor due to innovation, mobile phones, and other disrupted channels of information, clients are demanding more from their advisors. Alts are one of those expectations. — Deshawn Peterson
7. Good News for Advisors: Investors Paying For Advice Are More Confident
It’s often said we get what we pay for. That implies the more expensive a product is, it should offer more durability or come with more prestige than a less expensive equivalent. Likewise, a higher-priced service should be better than the cheaper alternative. — Todd Shriber
8. Is a Recession Coming?
That was quite the turn in the markets last week. The whiplash from bullish to bearish action has everyone whispering the word “recession.” Before we panic, let’s assess what’s actually happening in the markets. — Bob Lang
9. Unearthing the Risks of Living by the 4% Rule
Using historical stock returns and retirement data from 1929 to 1991, Bengen determined that retirees can safely withdraw 4% of their retirement balance, in a 50/50 stock and bond portfolio, to live on during their post-employment years—with annual readjustments for inflation. He concluded that the remaining retirement savings could last 30 years or more, even during difficult market conditions. — Jackson
10. 5 Frightening Reasons Benchmarking Stifles Creativity
Benchmarking is a popular business practice where you compare your operations to “industry leaders” (an undefined term.). While it may improve efficiency, it can also hinder innovation and strategic effectiveness. — Roy Osing
11. Markets in the Mood to Price in a Recession, Here Is How to Position
We have flagged multiple times in the last couple of months (here and here) that risks were building in the markets, given the growing disconnect between elevated expectations and a slowing economy, along with a slew of other potential risks. Looking at the five risks we have highlighted for the second half of 2024, most of them indeed unnerved markets throughout the last two to three months – the AI hype disappointment, election risks impact on tech via export controls, worries about the consumer and concerns about the economy. — Anastasia Amoroso, Peter Repetto and Nicholas Weaver